OAKVILLE, ON: Algonquin Power & Utilities Corp. (TSX: AQN) (NYSE: AQN) ("AQN" or the "Company") today announced financial results for the fourth quarter and year ended December 31, 2022. All amounts are shown in United States dollars ("U.S. $" or "$"), unless otherwise noted.
"Despite various challenges throughout the year, we ended 2022 on stable footing, with our Adjusted Net Earnings1 per common share having met the Company's revised guidance estimate," said Arun Banskota, President and Chief Executive Officer of AQN. "We remain confident that the decisive actions previously announced by the Company to realign capital allocation will strengthen our financial and strategic foundation and position AQN for sustainable, long-term growth. AQN continues to be supported by a high-quality asset base and has the right skills and expertise to capitalize on the energy transition and deliver value for shareholders."
Fourth Quarter and Full Year Financial Highlights
Fourth quarter Adjusted EBITDA1 of $358.3 million, an increase of 20%;
Fourth quarter Adjusted Net Earnings1 of $151.0 million, an increase of 10%;
Fourth quarter Adjusted Net Earnings1 per common share of $0.22, an increase of 5%;
Annual Adjusted EBITDA1 of $1,256.8 million, an increase of 17%;
Annual Adjusted Net Earnings1 of $474.9 million, an increase of 6%;
Annual Adjusted Net Earnings1 per common share of $0.69, a decrease of 3%, in each case on a year-over-year basis.
All amounts in U.S. $ millions except per share information Three months ended December 31 Twelve months ended December 31 2022 2021 Change 2022 2021 Change Revenue $ 748.0 $ 592.0 26 % $ 2,765.2 $ 2,274.1 22 % Net earnings (loss) attributable to shareholders (74.4) 175.6 (142) % (212.0) 264.9 (180) % Per common share (0.11) 0.27 (141) % (0.33) 0.41 (180) % Cash provided by operating activities 214.6 126.5 70 % 619.1 157.5 293 % Adjusted Net Earnings1 151.0 137.0 10 % 474.9 449.0 6 % Per common share 0.22 0.21 5 % 0.69 0.71 (3) % Adjusted EBITDA1 358.3 298.3 20 % 1,256.8 1,076.3 17 % Adjusted Funds from Operations1 258.4 221.2 17 % 864.1 757.9 14 % Dividends per common share 0.1808 0.1706 6 % 0.7130 0.6669 7 % 1 Please refer to "Non-GAAP Measures" below for further details. Fourth Quarter Highlights
Pending Acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. — On October 26, 2021, Liberty Utilities Co., an indirect subsidiary of AQN, entered into an agreement with American Electric Power Company, Inc. and AEP Transmission Company, LLC to acquire Kentucky Power Company and AEP Kentucky Transmission Company, Inc. (the "Kentucky Power Transaction"). On December 15, 2022, the U.S. Federal Energy Regulatory Commission ("FERC") issued an order denying, without prejudice, authorization for the Kentucky Power Transaction. On February 14, 2023, a new application was filed with FERC for approval of the Kentucky Power Transaction. Closing of the Kentucky Power Transaction remains subject to the satisfaction or waiver of certain conditions precedent, which include the approval of the Kentucky Power Transaction by FERC and clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as the clearance received previously has lapsed).
Inaugural Asset Recycling Transaction — On December 29, 2022, the Company closed the previously-announced sale of ownership interests in a portfolio of operating wind facilities in the U.S. and Canada to InfraRed Capital Partners, an international infrastructure investment manager that is part of SLC Management. The transaction consisted of the sale of (1) a 49% ownership interest in three operating wind facilities in the U.S. totaling 551 MW of installed capacity, and (2) an 80% ownership interest in the 175 MW operating Blue Hill Wind Facility in Saskatchewan. Total cash proceeds to the Company were approximately $277.5 million for the U.S. facilities and approximately C$108.6 million for the Blue Hill Wind Facility (subject to certain potential future post-closing adjustments). A gain on disposition of $62.8 million was recognized and included in gain on sale of renewable assets on the Company's consolidated statements of operations. This gain is also included in the Company's Adjusted Net Earnings and Adjusted EBITDA for 2022 (see "Non-GAAP Measures" below).
Investor Update – On January 12, 2023, the Company announced decisive actions to support its long-term energy transition strategy. These actions include a reset of its quarterly dividend from $0.1808 to $0.1085 per common share, reduced capital intensity, intention to raise approximately $1 billion in asset sales with announcements targeted in 2023, and a commitment to a BBB credit rating.
Credit Rating Affirmations – In January 2023, S&P and Fitch affirmed their existing ratings and outlook. In addition, S&P indicated that its negative outlook reflects the execution risk associated with the Company's asset recycling strategy. In February 2023, DBRS affirmed its existing ratings and removed AQN from "Under Review with Developing Implications", updating the outlook to "Stable".
Atlantica Strategic Review – On February 21, 2023, Atlantica Sustainable Infrastructure plc (NASDAQ: AY) ("Atlantica") announced that its board of directors has commenced a strategic review process. AQN, which owns approximately 42% of Atlantica, supports the commencement of that process.
Other 2022 Highlights
Acquisition and Integration of Liberty NY Water (formerly New York American Water Company Inc.) — Effective January 1, 2022, the Company closed the acquisition of Liberty Utilities (New York Water) Corp. ("Liberty NY Water") from American Water Works Company, Inc. for a purchase price of approximately $609 million. Headquartered in Merrick, NY, Liberty NY Water is a regulated water and wastewater utility serving approximately 127,000 customer connections across eight counties in southeastern New York. Integration of Liberty NY Water into the Company's East Region is proceeding well.
Completion of the Blue Hill Wind Facility – On April 14, 2022, the Renewable Energy Group achieved full commercial operations at its 175 MW Blue Hill Wind Facility, located in southwest Saskatchewan. The Blue Hill Wind Facility is the Renewable Energy Group's 15th wind powered electric generating facility and is expected to generate approximately 683 GW-hrs of energy per year, with the output being sold through a long-term power purchase agreement with an investment grade rated entity. As noted above, the Company subsequently sold an 80% ownership interest in the Blue Hill Wind Facility as part of its inaugural asset recycling transaction.
Reiterate Estimated 2023 Adjusted Net Earnings Per Common Share – The Company reiterates its previously-disclosed estimate of Adjusted Net Earnings per common share for the 2023 fiscal year within a range of $0.55-$0.61 (see "Non-GAAP Measures"). Estimated 2023 Adjusted Net Earnings per common share is calculated excluding the impact of gains or losses from asset dispositions, but is otherwise calculated in a manner consistent with the description set out under "Caution Concerning Non-GAAP Measures – Adjusted Net Earnings" in AQN's Management Discussion & Analysis for the three and twelve months ended December 31, 2022 (the "Annual MD&A"), which will be available on SEDAR, EDGAR and the Company's web site. In addition, the Company's estimate for 2023 Adjusted Net Earnings per common share is based on, and should be read in conjunction with, the assumptions set out under "Outlook – Estimated 2023 Adjusted Net Earnings Per Common Share" and "Caution Concerning Forward-Looking Statements and Forward-Looking Information" in the Annual MD&A. Please also refer to "Caution Regarding Forward-Looking Information" and "Non-GAAP Measures" below.
Capital Investment Expectations – Assuming closing of the $2.646 billion Kentucky Power Transaction, the Company expects to spend approximately $3.6 billion on capital investment opportunities in the 2023 fiscal year. Of this amount, approximately $3.3 billion is expected to be spent by the Regulated Services Group and approximately $300 million is expected to be spent by the Renewable Energy Group.